For insurers writing international business, sanctions compliance has four pressure points where risk is most acute - and the most dangerous of them is not at the point of underwriting a policy but at the point of paying a claim. A July 2026 webinar held as part of Clyde & Co's Insurance Emerging Risk programme set out where sanctions risk bites hardest and why the compliance environment has become structurally more demanding than at any point in the past 15 years.
The four pressure points run through the full policy lifecycle. At underwriting and placement, exposure can arise not just through the insured directly but through their operations, counterparties and supply chains - a chain of indirect exposure that standard onboarding checks may not reach. Claims handling carries the highest acute risk: a payment may constitute making funds or economic resources available to a designated person, which is precisely what sanctions regimes are designed to prohibit. The strict liability standard that now applies in both the UK and US means intent is irrelevant - the breach is the payment itself.
Ongoing policy management is the pressure point that most consistently catches insurers off guard. Designations and new trade restrictions can emerge mid-policy, meaning a counterparty that was clean at inception may be listed six months later. One-off onboarding checks do not address this; only continuous screening does. Reinsurance and third-party relationships add a fourth layer of complexity, as cross-border arrangements and reliance on intermediaries create indirect exposure that the primary insurer may not see clearly.
The compliance environment that creates these risks has expanded significantly in scale, scope and sophistication over the past 15 years. Three developments in the past year are particularly relevant for insurers.
In the UK, the Office of Financial Sanctions Implementation issued updated enforcement guidance in February 2026 introducing a four-tier seriousness model and a new "strategic priority" category expected to attract stronger enforcement action. OFSI has also proposed doubling its penalty cap from the greater of £1 million or 50% of a breach's value to the greater of £2 million or 100% - a direct signal of enforcement intent. In the US, OFAC updated its guidance to clarify that sanctions clauses, whatever their exact wording, must prevent the extension of insurance coverage or indemnification to sanctioned persons or jurisdictions. In June 2026 OFAC and OFSI jointly published a comparative overview of the two countries' sanctions authorities to help firms reconcile licensing processes, penalties and liability standards - a recognition that the divergence between regimes is itself creating compliance complexity for multinational businesses.
At EU level, the 19th sanctions package, adopted in October 2025, introduced a full ban on Russian LNG imports, tighter transaction restrictions on Rosneft and Gazprom Neft, crypto exchange sanctions and new listings. UK and EU regimes broadly mirror each other in structure but are diverging in application, adding to the navigation burden for insurers operating across both.
Beyond the US, UK and EU, sanctions are no longer globally aligned. Jurisdictions across Asia-Pacific and the Middle East often maintain more limited domestic regimes focused on UN measures, but companies there remain exposed to international sanctions through cross-border activity. Three specific fragmentation risks are worth flagging: exposure to US secondary sanctions through dollar-denominated transactions or US-linked activity; China's anti-foreign sanctions law creating competing legal obligations that can conflict directly with US or EU requirements; and Russian countermeasures leading to parallel proceedings and conflicting judgments. Each of these can create a situation where complying with one regime means breaching another.
Enforcement activity is increasing globally, with higher penalties, enhanced reporting obligations and growing willingness among regulators to publicise outcomes. Issues typically arise not from deliberate misconduct but from limited visibility of counterparties and beneficial ownership, fragmented internal systems and incomplete data, and genuine misunderstandings in a complex environment. The UK, Canada and Australia are all strengthening their frameworks.
The practical consequence is that sanctions compliance can no longer be managed as a periodic compliance exercise or delegated entirely to a compliance team. It requires integrated governance, robust due diligence and clear escalation frameworks across underwriting, claims and reinsurance - which is what the shift from compliance checkbox to strategic priority actually means in operational terms.
